Richard Branson: Virgin Master

When it comes to starting companies, Richard Branson, founder and president of the Virgin Group, is anything but a virgin. The English-born entrepreneur and adventurer has had a hand in starting hundreds of businesses in a variety of fields, including music recording (he signed the Sex Pistols!), retail, mobile-phone networks, financial services, aviation and soft drinks (though Virgin Cola has yet to hit the spot). Even Branson's death-defying escapades in long-distance ballooning pale in comparison to his fearlessness in establishing ventures in tenuous commercial areas: his willingness to greenlight new businesses have earned him the nickname "Dr. Yes." Among his latest are Virgin America, a U.S.-based low-fare carrier; Virgin Money, a service to generate loans from friends and family, and Virgin Galactic, a tourist shuttle to outer space. Branson, 57, is also passionate about dealing with the climate crisis, pledging to direct all the profits from his aviation business into an enterprise developing sustainable energy. He spoke to NEWSWEEK by phone from Necker Island, his private Caribbean retreat.

Levy: Why are you so bullish on air travel when things are looking so grim for that whole industry?
Branson:
The best club in town never goes bankrupt, the best hotel never goes bankrupt, the best restaurant never goes bankrupt and the best airlines never go bankrupt. We started Virgin Atlantic 25 years ago, with one plane, and of the 13 American competitors we competed with across the Atlantic, every single one of them has gone bankrupt. If you can create a really good-quality product, even in difficult times you're likely to do well.

Presumably your competitors were smart people. What did you do right?
I try to create the kind of airline that I'd like to fly on. I hate getting stuck in my seat the whole journey, so with Virgin Atlantic, we put in stand-up bars where people can meet friends and talk. With Virgin America, you can order your food when you want from the seat and you don't have to wait for a stewardess to come to you. But [I take issue] when you say that in the airline business we're competing with bright people. In other businesses we're in, our competitors are extremely good at creating good-quality product. But the American airline industry is the exception to the rule. Getting on an American airline for most people is just about the worst experience of their lives. Thank God. Otherwise we wouldn't exist today.

You've started a Web site that handles bookings for small planes, Virgin Charter. Why?
If you want to charter a private plane, it's extremely difficult. When you get your secretary to ring up, she'll find a plane, most likely, but you don't know whether the price is fair, don't know the history about that plane, you don't know whether the crew onboard are any good. Virgin Charter basically is the first really good-quality-entrant online private-aviation site, and its technology makes it much easier to compare price, aircraft, quality, safety records, and it just ensures clients get the right plane for their trip.

When's the last time you used the Virgin Charter site to book a flight for yourself?
About three weeks ago I needed to get a plane from the Caribbean to the States, and we used Virgin Charter. I'll be using it a number of times a year.

How far can you stretch a brand before it starts losing its mojo?
For about 30 years, every time we've moved into a new area, the journalists have written, "Is this going to be one step too far for Virgin?" And it hasn't happened. Apple and Microsoft specialize in computers and Coca-Cola specializes in soft drinks, and Nike specializes in shoes. But Virgin is a way-of-life brand. Also, in every sector we're in, we're very much the David vs. the Goliath. As long as we don't let the consumers down in any new sectors we go into, I think we can still stretch the brand quite a lot further. I suspect that Virgin Galactic will propel the Virgin brand into the top 10 most respected brands in the world.

Are you really on track for a commercial space launch in 2009?
[In] 2009 or 2010. In July we're unveiling the mother ship that will be carrying the spaceship up to 60,000 feet. Next year the spaceship will come out of its hangar and it will then start extensive tests and flights into space with test pilots and astronauts. By the time we open to consumers we will have done about as many flights into space as NASA has done in the history of their flights. I'm going to be taking my family—my parents, my children, myself—so it's going to well tried and tested before my wife will let me take them aboard.

How affordable will a space flight be?
Initially it's going to cost a couple of hundred thousand dollars. But over the next 10 years, we think the price will be able to come down quite dramatically from that, and our aim is to enable hundreds of thousands of people over the years to experience space rather than just a selected few.

What's the impetus for Virgin Money, your financial-services venture?
The idea is to try to help families work together at a time when it's almost impossible to get student loans. Many, many years ago, I was trying to build a recording studio called the Manor, and I needed a second mortgage. I went to my aunt and she lent me the money. It cost me less money than it would have if I had gone to a mortgage company; it made her more money than she would've done if she'd had the money invested, and we both did very well out of it. That's the basic principle behind Virgin Money.

What do you think the future holds for the music business?
The combination of the iPod and the Internet has really been the death knell to the music industry. But I think live music has a great future, and that's one of the reasons we put on big Virgin festivals. [The next is in Baltimore in August.]

What about the fate of your retail stores?
Extremely tough. We sold most of our retail stores around the world a few years ago. Basically because we didn't think that retail had a great future.

How big a business do you think you're getting into with Virgin Greenfund and in general getting involved in alternative energy?
It's obviously going to be a very big business for us, because we pledged 100 percent of all the profits we make in airlines over the next 10 years will be invested in clean energy and trying to develop clean fuels. I'm more convinced than ever the world is spiraling out of control and that global warming could end up killing billions of people on Earth.

Could the business community develop clean-fuel technology by itself, or is it necessary for governments to fund some of these efforts?
Governments can encourage people by the way they tax, and they can certainly help to push the world toward a cleaner world. The American government has done very, very little about this, and hopefully whoever takes over [next] year will put it high on their list of priorities.

You recently hosted a meeting about this on your island with leaders in business, science and politics. What came of that?
Let's assume that the majority of scientists are correct and that the threat of global warming is worse than World War I and World War II put together. Carbon is the global enemy, and there needs to be a global-environmental war room to make sure all the best ideas are looked at and researched. Where is the center to collate all the great ideas that are around the world on how to protect rain forests? Where is the center to look at what we're going to do with rising sea levels? Can we create massive inland lakes where we can maybe funnel some of the water when the sea levels rise rather than just flood all the coastal cities, all the major cities of our world? And so on. So what came out of it was that we are in the process of setting up this war room. We've put in an initial $3 million, and Google has indicated that they are keen to support it, along with a number of others.

Will this be a physical war room somewhere, or is it a virtual war room?
It will be physical and virtual, so … well, you can't really have both, but it'll be physical.

Where will it be?
It's not settled yet, but it's likely to be London.

If the crisis is so severe, shouldn't people just stop flying?
It's certainly an argument. About 2.5 percent of all carbon is from airlines around the world, and they obviously contribute to the problem. My own belief is that the best way of tackling this problem is by technology, not by turning progress back to the Dark Ages. Hopefully those billions that we hope to make from the airlines will contribute toward coming up with a solution.

How do you respond to charges that wealthy people who are interested in resolving these problems are hypocritical because they lead lavish lifestyles?
I live on an island, and within a few months it will be 100 percent carbon-neutral. It'll be powered by wind, it'll be powered by solar, there will be batteries to store the solar and the wind when there's no sun and there's no wind, and the wood that we're using to develop the island next door will all be properly specified to make sure that none of it is coming from rain forests. So I do think that wealthy people do need to lead by example.

What was your relationship with Johnny Rotten like?
It was good: the Sex Pistols' bark was much worse than the bite. They were young lads having a lot of fun, and I was a young lad, too. It was one of the best years of my life.

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